April 14 (Bloomberg) -- Swiss and international regulators
will probably ask banks to hold more capital in relation to
total assets after the U.S. raised leverage-ratio requirements
for the biggest lenders, UBS AG Chairman Axel Weber said.

“I do expect that to become kind of the new norm for all
the global banks,” Weber said yesterday in an interview on Fox
News’s “Sunday Morning Futures” program, referring to stricter
caps on leverage approved by U.S. regulators this month.

The biggest U.S. bank holding companies must amass as much
as $68 billion in additional loss-absorbing capital under the
new leverage-ratio rules, which require at least 5 percent
capital as a proportion of assets at the holding-company level
and 6 percent at banking units. The rules, designed to curtail
financial-system risk, surpass the 3 percent minimum set in a
global agreement by the Basel Committee on Banking Supervision.

“I expect that to gradually increase,” Weber, 57, said in
the interview with Maria Bartiromo. “As soon as a number like
that is out and a major constituency adopts this, there’s
pressure on everyone else to follow.”

‘Unrealistically High’

Weber’s comments are the first admission that the biggest
Swiss banks may have to boost their capital levels further. The
nation’s requirements for the banks considered too big to fail
are due for a review in 2015. Swiss Finance Minister Eveline
Widmer-Schlumpf shook the industry in November by saying the
current leverage restriction may be too low, suggesting a level
of 6 percent to 10 percent.

Bank executives pushed back. UBS Chief Executive Officer
Sergio Ermotti, 53, called the leverage requirement suggested by
Widmer-Schlumpf an “unrealistically high demand,” Schweiz am
Sonntag newspaper reported Dec. 15, citing an interview. Credit
Suisse Chairman Urs Rohner, 54, said he doesn’t expect a
tightening of the requirement will be necessary in 2015,
according to a December interview in Bilanz magazine.

Weber said it “won’t make a big difference” for UBS
whether the minimum requirement moves to 4.5 percent or 5
percent.

“But I think it’s a journey that really is now more or
less clear on the horizon because the U.S. has done it,” he
said in yesterday’s interview. “We’re a bank that operates in
the United States, so we want to fulfill those requirements that
U.S. peers have to fulfill just out of self-interest” not to be
perceived as weaker.

Capital Returns

A higher requirement in Switzerland would force banks to
shrink further or accumulate more capital, potentially
restricting how much they can pay in dividends.

“Given the U.S. move, Swiss proponents of a higher
leverage ratio will find their hand strengthened in 2015,” Matt
Spick, a London-based analyst at Deutsche Bank AG, said in a
note today. “Both banks could reach a 5 percent threshold by
2016 and 6 percent by 2017 even including their current dividend
plans, albeit any hopes for additional capital returns (share
buybacks) could be curtailed. At the margin, we think a higher
leverage ratio would be a bigger drag for Credit Suisse than for
UBS.”

UBS plans to start disbursing more than 50 percent of
profits in dividends after it reaches the common equity ratio of
13 percent under fully applied Basel III rules this year. The
ratio stood at 12.8 percent at the end of December.